Econ Set Final

Needs

things that are required in order to live

Wants

things that add comfort and pleasure to your life

goods

Physical objects such as clothes or shoes

Services

Actions or activities that one person performs for another

opportunity cost

Cost of the next best alternative use of money, time, or resources when one choice is made rather than another

Trade-off

the act of giving up one benefit in order to gain another, greater benefit

Scarcity

A situation in which unlimited wants exceed the limited resources available to fulfill those wants

shortage

a situation in which a good or service is unavailable

surplus

A situation in which quantity supplied is greater than quantity demanded

factors of production

Land, labor, and capital; the three groups of resources that are used to make all goods and services

supply and demand

relationship between the amount of product and the desire for the product

Privitization

Letting the private sector take over an area that was typically run by the government.

IPO

Initial public offering, a corporation's first offer to sell shares to the public

profit

total revenue minus total cost

Marketization

The state's recreation of a market in which property, labor, goods, and services can all function in a competitive environment to determine their value.

Monopoly

A market in which there are many buyers but only one seller.

Entrepenuer

A person who organizes, manages, and takes on the risks of a business.

competition

the struggle among producers for the dollars of consumers

Capitalsim

an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.

NYSE

New York Stock Exchange

NASDAQ

National Association of Securities Dealers Automated Quotations

Equity

fairness

Liquidity

the ease with which an asset can be converted into cash

Assets

money and other valuables belonging to an individual or business

Stocks

shares of ownership in a company

Dividends

Company's share profits to the shareholders based on the corporation's performance.

Bonds

A certificate issued by a government or private company which promises to pay back with interest the money borrowed from the buyer of the certificate: The city issued bonds to raise money for putting in new sewers.

liability

an amount owed

bull and bear markets

bull: rising; bear: falling

subsidy

A government payment that supports a business or market

Deregulation

the removal of some government controls over a market

credit card

A plastic card used to make purchases now and pay for them later.

APR

Annual percentage rate; the annual rate of interest that is charged for using credit

Credit Score

A measure of an individual's credit risk; calculated from a credit report using a standardized formula

principal

amount of money borrowed in a loan

interest

money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt.

GDP

Gross Domestic Product- the total market value of all final goods and services produced annually in an economy

Inflation

a general increase in prices and fall in the purchasing value of money.

Recession

A slowdown in a nation's economy

default

failure to pay back a loan

mortgage

A loan to purchase a home or other real estate

Tariff

A government tax on imports or exports

comodities

goods produced for sale

fixed rates and variable rates

fixed rates have the same interest rate the whole time, but variable rates can vary and become different.

deficet spending

government spending, in excess of revenue, of funds raised by borrowing rather than from taxation.

W-2

A statement of an individual's annual wages and taxes provided by an employer that must be included with the employee's federal, state, and city income tax returns.

W-4

A federal tax form filled out by an employee to indicate the amount that should be withheld from his/her paycheck for taxes.

tax rate

the amount of tax people are required to pay per unit of whatever is being taxed

IRS

(Internal Revenue Service) Governmental agency responsible for collecting federal taxes, issuing regulations, and enforcing tax laws

Social Security

federal program of disability and retirement benefits that covers most working people

Medicare

A federal program of health insurance for persons 65 years of age and older

Mandatory vs. Discretionary Spending

mandatory- essentially automatic, programs the gov can't cut (Medicare, Social Security), always get money

discretionary- set by the gov through appropriations bills, can be cut

Adam Smith

Scottish economist who wrote the Wealth of Nations a precursor to modern Capitalism.

market economy

Economic decisions are made by individuals or the open market.

command conomy

an economy in which production, investment, prices, and incomes are determined centrally by a government.

mixed economy

market-based economic system with limited government involvement

savings account

An account at a depository institution that is designed to hold money not spent on current consumption

checking account

An account that allows quick access to funds for transactions

CD

Certificate of Deposit; saving certificate with a fixed saving period and fixed interest rate

regressive tax

A tax whereby people all pay the same amount.

progressive tax

An unfair tax to the rich, that charges the higher income people more so that they feel the same weight of taxes as the lower income people.

proportional tax

A fair tax that charges the same percent of money from all people, everyone pays the same percent of their income.